Land Securities looks to be bold
BRITAIN’S biggest property group Land Securities has said it is prepared to make further “bold” decisions on the timing of developments as it revealed that the value of its portfolio fell by £4.74bn in the year to the end of March.
The FTSE 100 company which owns the White Rose Centre in Leeds and the Victoria Shopping Centre in Harrogate, recently announced a two year delay to the completion of the £650m Trinity Quarter shopping centre it is developing in Leeds with Caddick Developments.
The centre, due to open at the end of next year, will now not be completed until 2012 but Land Securities’ chief executive Francis Salway said it was a “bold decision on timing”.
“Our history shows that we are not afraid to take tough development decisions. We remain ready to take further similar decisions as appropriate, despite their potential impact on earnings in the short term.”
Gerald Jennings, Leeds-based portfolio director for Land Securities, said despite problems for the general retail sector, the White Rose Shopping Centre in Leeds had attracted almost 13 visits over its last financial year.
Mr Jennings said: “These visitors stayed longer, spent more and took advantage of the catering offer during their stay.
“These are all positive signs, but perhaps the most encouraging is the fact that in spite of the high profile high street casualties that there have been since our last full year figures, White Rose remains at almost full capacity, with less than 1% of void units.”
And he added: “Looking at the performance of White Rose gives us added confidence in the Leeds economy and the future for the two major assets that we have in the UK’s third largest city.
“Though we had to take the difficult decision of re-scheduling the target date for delivery of Trinity Leeds in the city centre to 2012, we believe that when the economic upturn arrives, we will be well-placed with two complementary offers serving different parts of the market and different shopper requirements.”
In support of its strategy of effective balance sheet management, Land Securities sold Victoria Shopping Centre in Harrogate before the end of the financial year to Coal Pension Properties.
Announcing its full year results today, the group said adjusted diluted net asset value (NAV) per share dropped 66.4% to 593p.
Its investment properties are now valued at £7.93bn and the dividend has dropped 10.4% to 51.1p.
“While the market may see some pockets of stabilisation for certain asset types, we expect conditions to remain challenging in a weak economic environment, with vacancy rates rising and rental values weakening, putting pressure on rental income,” said Mr Salway.
Land Securities reported a pre-tax loss of £4.77bn for the 12 months to the end of March, reflecting an unremitting repricing of property since the credit crisis gripped in summer 2007.
It said gross rental income across its London and retail property divisions rose by a total £14.3m, but its rental void rate – the amount of empty space in its portfolio – rose to 4.6% from 3.5% last year.
Shares in the company, which owns or part-owns the Bullring Shopping Mall in Birmingham, the Piccadilly Lights and the Cardinal Place office complex in central London, have tumbled by almost 60%r.
But despite fears for continued market turmoil Land Securities said its financial future had been bolstered by 1.1 billion pounds of asset sales and its £756m rights issue in February.
Net debt dropped 27.1% to £3.92bn and smaller interest payments helped to boost revenue profits by 10.6% to £314.9m.
